Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil futures prices opened above $60/b for the first time since November 12th. WTI (West Texas Intermediate) crude forward prices opened today at $60.03/b today, up by $0.91 (1.54%) from yesterday’s opening price of $59.12/b. Gasoline and diesel futures prices also opened with gains today. Prices currently are easing, with WTI crude prices hovering around the $60/b level and product prices ebbing below opening levels. Markets will likely hover until additional guidance is provided by official statistics on U.S. supply.

Oil prices remained reasonably stable yesterday, despite data from the American Petroleum Institute (API) showing an unexpected increase in crude oil inventories. The API reported a crude stock build of 1.93 million barrels (mmbbls.) Analysts forecast that the official statistics from the Energy Information Administration (EIA) will show an inventory reduction of 1.1 mmbbls. The API also reported a drawdown of 3.469 mmbbls from gasoline inventories and a significant drawdown of 4.278 mmbbls. The drawdowns from product inventories helped soften the impact of the crude stock build, since the net result was a 5.817-mmbbl reduction in oil inventories.

The EIA will publish official statistics later today. A sizable stock draw would be viewed as highly bullish.
Reports have emerged that two South Korean refiners, SK and Hyundai, rejected cargoes of U.S. crude for quality reasons. The cargoes apparently picked up metals and oxygenates during the long journey from oilfield to tanker to destination. The U.S. has emerged as a growing exporter of crude oil, with exports more than quadrupling over the past four years to reach 2 million barrels per day (mmbpd) in 2018. Not all U.S. export streams would be expected to have the same levels of contaminants, and not all refineries would face technical problems in processing U.S. crudes. But the aspirations of some producers to expand exports may now face difficulties in Asia, and additional efforts may be needed to keep export streams segregated in their own transport infrastructure.